It’s 5:30 p.m. on a Sunday, and Oscar’s is the only place in town with a line out the front door. More than 300 people, mostly burly middle-aged men in shorts and t-shirts, crowd the courtyard, drinking, dancing and laughing as a drag queen lip-syncs disco from a small outdoor stage and shirtless dancers twirl tie-dye flags on a balcony overhead.

On this evening, as it is almost every Sunday, Oscar’s Café and Bar is a joyful place. Week after week, Oscar's is maybe the loudest and proudest spot in Palm Springs, a colorful cultural beacon that stands out even here, one of the gayest towns in America.

But behind the scenes, this beloved restaurant is reeling from the worst crisis it has faced since it opened four years ago.

And – depending on whom you ask – Oscar's has been stolen.

A line forms outside of Oscar's Cafe and Bar on Sunday for its weekly tea dance party, Sunday, October 16, 2017.(Photo: Zoe Meyers/The Desert Sun)

Over the past year, Oscar’s has been nearly torn apart by a tug-of-war between two businessmen, founder Jeffrey Schmitz and current operator Daniel Gore, both of whom claim they are the rightful owner of the restaurant. Each man has accused the other of theft, fraud and unfair business practices both in and out of court. Their dueling lawsuits continue today with no end in sight.

And all this has taken a toll on Oscar’s, which was deep in debt even before the infighting began. Since last August, the restaurant has lost a liquor license, been repeatedly burglarized, had its Facebook presence erased and twice run short on supplies because of an act of alleged sabotage. At least three employees have reported that Schmitz has harassed or intimidated them and that the owners’ rivalry has jeopardized their jobs and even forced them to briefly apply for unemployment benefits. The conflict peaked last month when Riverside County prosecutors filed misdemeanor charges against Schmitz for allegedly violating a court order to stay away from Gore. There is currently an active warrant for Schmitz’s arrest.

Daniel Gore, the current operator of Oscar's, is one of two businessmen who claim rightful ownership of the beloved restaurant.(Photo: David A. Lee, special to The Desert Sun)

“I guess I’ve won … but it’s sad to me,” Gore said earlier this month, sitting in his empty restaurant before it opened. “This was a dying business. It wasn’t something we should have fought about.”

To understand the scope of the fight over Oscar’s, Desert Sun journalists reviewed more than 500 pages of court records, financial agreements and internal documents, then whittled down the abundant allegations to only those backed by sworn court statements or supporting documentation, uncovering a surprisingly complex squabble from which Gore appears to have emerged the victor.

As of today, he has wrested control of the restaurant away from its original owner. Gore says he has spent tens of thousands to dig the business out of debt, but admits he has never paid a cent directly to Schmitz for Oscar’s ownership.

“He got nothing to put in his pocket,” Gore said.

“But he also walked away from here with no debt.”

The battle begins

Oscar’s Café and Bar, a pet-friendly brunch place, opened on a corner in downtown Palm Springs in 2013. It quickly became a hotspot in the city’s gay nightlife scene, best known for a weekly “tea dance” party that packed the large courtyard with men, drinks and music.

On Sunday nights, maybe nowhere in Palm Springs is busier.

Jeffrey Schmitz, one of the founders of Oscar's, is photographed at the restaurant in 2014. Schmitz is one of two businessmen fighting over ownership of the beloved bar.(Photo: Provided by Jeffrey Schmitz)

But the tea dance alone, apparently, was not enough to sustain Oscar’s. By the end of last summer, the restaurant had amounted more than $150,000 of debt and was facing eviction. The owners – Schmitz and his silent partner Gene Switzer – were looking to sell but torn between two offers.

The first had come from an outside buyer who’d offered $125,000 but had plans to rename and restructure the restaurant, possibly shutting down the tea dance, Schmitz said.

The second offer was a more complicated deal with Gore, a drag show producer who had been managing a performance at Oscar’s for about a year and a half. Gore wanted to keep the Oscar’s name and the tea dance. He insisted, based on the Sunday crowds, he could turn Oscar’s into a success.

Schmitz chose Gore. It’s a decision they both have come to regret.

“I didn’t want to see Oscar’s change or go away,” Schmitz said. “I figured that if somebody else can make it work, that’s great. Instead, it’s really just sad.”

Gore and Schmitz inked a deal that worked like this: Gore would become the “exclusive manager” of Oscar’s from mid-August until the end of the year, working to pay off the restaurant’s debt but keeping the money if he actually turned a profit. While Gore was in charge, Schmitz promised not to visit Oscar's without his permission and not to take any free food or alcohol even though he still owned the place. After four months, Gore would have the option of buying Oscar’s for $100,000, payable in installments over three years.

Ideally, Schmitz would escape a failing restaurant with years of a dependable income. Gore would get a great price on a restaurant with dedicated customers. Both men would win.

Instead, the deal began to fall apart even before it was signed.

The first signs of trouble came from Daniel Powell, then a bartender at Oscar’s, who was chatting with Schmitz shortly before the deal was final.

Powell told Schmitz it was a shame that he was leaving a business he had put so much time and money into. Schmitz allegedly responded that he “wasn’t worried about it” because he was going to “get it back anyway,” according to a court declaration by Powell, filed a year later under penalty of perjury.

“It was then that Jeffrey (Schmitz) told me that he planned to let Dan Gore get Oscars ‘all cleaned up,’ including pay off all the outstanding vendors,” Powell said in the court declaration.

“And then Jeffrey was going to refuse to transfer the liquor license to Dan Gore so that the business would fail and then Jeffrey would take it back.”

Barred from the bar

It was Nov. 21 when Gore turned in court paperwork with a strange request – he wanted Schmitz to be forbidden from entering a bar that he technically still owned.

Three months had passed since Gore had taken the helm of Oscar’s, and management was not going as planned. First, he immediately started getting angry texts from Schmitz, who didn’t like a new Oscar’s logo. Second, less than a week after Gore had taken charge, Schmitz returned to Oscar’s to take bottles of champagne and alcohol without paying, according to sworn statements by Gore and another bartender, Aaron Piercy. Schmitz had already broken two rules from the management agreement – no free drinks and don't come on the property without permission.

But the larger issue, Gore said, was that Schmitz had never handed over control of the restaurant's Facebook page. The page was essential to promoting Oscar's tea dance and drag shows, but Gore claims Schmitz was using it to spread the word about competing shows at other venues.

So Gore filed a court petition seeking a restraining order against Schmitz, hoping that a little legal muscle would put the issue to rest. He told a county judge that Schmitz had “harassed and intimidated” employees though text messages and hampered the business through “Facebook manipulation.”

“Please stop interfering with the business or its employees you relinquished,” Gore wrote on the court petition, hoping the judge would repeat his words in the restraining order.

A judge scheduled a hearing on the petition about two-and-a-half weeks out.

Two days before that hearing, the "interference" got worse.

CLOSE

At a Palm Springs hot spot, a feud between owners puts a popular weekly dance party, and the business, in jeopardy.
Wochit

On Dec. 7, Schmitz sent text messages to Oscar’s liquor vendor, Southern Glazer’s Wine & Spirits, cancelling an order and leaving the restaurant with no alcohol. According to a printout of the text messages, filed in court as part of a lawsuit, Schmitz told the vendor it should not give Oscar’s any more alcohol until all of the restaurant’s debts were paid.

As of then, Oscar’s owed Southern Glazer nearly $14,000.

“Absolutely nothing until paid,” Schmitz texted. “This is Jeffrey, the owner of Oscar’s. The money is coming, but I want it to go to your company. Not some drag shit.”

Two days after this text message was sent, a Riverside County judge approved Gore’s request for a restraining order, forbidding Schmitz from coming close to Gore or his roommate, Jose Esparza, who was working as the manager of Oscar’s. The order didn't prevent Schmitz from texting other Oscar's employees and he wasn't technically barred from the restaurant, but he couldn’t go there when either Gore or Esparza were on the premises, which would be almost always during business hours. Schmitz was also ordered to give Gore access to the Oscar's Facebook page.

In his own lawsuit and interview, Schmitz has argued that this restraining order was the centerpiece of Gore’s plan for a “hostile takeover” of the restaurant.

Schmitz said he began texting employees and vendors after the August dealbecause he worried Gore would drive Oscar's further into debt, then opt not to buy the restaurant, leaving Schmitz in an even deeper hole than when he started. However, once the restraining order barred him from his property, Schmitz was unable to protect Oscar’s from Gore, who “wanted to steal the company, not pay for it,” the lawsuit states.

Even now, Schmitz is still adamant the restaurant is his.

“I’m just dumbfounded that he got away with this,” Schmitz told The Desert Sun. “Right now he is sitting on my property. You can’t just come into somebody’s house and say everything inside is mine.”

One unexpected endorser of this theory is Esparza, the former Oscar's manager, who left the restaurant after it could not afford to pay him and no longer lives with Gore.

During an interview, Esparza said he felt the restraining order petition was unnecessary and exaggerated even though he was one of the victims who supposedly needed protecting. Esparza’s name was put on the petition without his knowledge, he said, and Gore didn’t tell him about it until the day it was approved.

Gore claimed Esparza had to be included because they were roommates, he said.

“That was the first time I ever knew about it. I didn’t ask for that, but my name was on there,” Esparza said. “But I didn’t have any reason. (Schmitz) and I never had a confrontation. We never had an altercation.”

A truce ended by Twitter

By the start of 2017, Oscar’s was still $110,000 in debt and caught in a power struggle. Dan Gore said he was the owner, even though he hadn’t paid for the business. Jeffrey Schmitz said he was the owner, even though he couldn’t step foot in the restaurant. Both men considered the other an impostor.

The tug-of-war had begun.

Gore’s official claim of Oscar’s ownership began on Dec. 29, 2016, when he says he took the option to purchase the restaurant that had been negotiated four months earlier.

However, over the next month, Schmitz continued to present himself as the owner, according to a sworn statement from Gore. First, Schmitz canceled another vendor order – leaving the restaurant without beer. Then, he tried to cancel an Oscar's mixer hosted by the Palm Springs Front Runners, a running and walking club, three days beforehand.

Infighting continued like this for another two months, until March 2, when it appeared that Schmitz and Gore cut a new deal in an effort to make peace and finalize the sale of Oscar’s.

Under the new agreement, the price for Oscar’s would drop from $100,000 to only $45,000, paid to Schmitz in installments of $5,000. Gore would also deposit enough money in the Oscar’s bank account to close it out, then open all new accounts in his name. Finally, Gore promised to cancel his restraining order against Schmitz.

In return, Schmitz would pay off $31,000 in debt that Oscar's owed to the California Board of Equalization and another $8,600 owed to the IRS. He would also sign paperwork transferring the liquor license to Gore and issue a written statement to vendors confirming he was “no longer an owner.” Schmitz agreed to relinquish control of the Oscar’s Facebook page, and make “every reasonable effort” to transfer the restaurant’s other social media accounts to Gore. The men appeared so confident that they had worked out their differences that Schmitz even signed a “confession of judgment,” a pre-negotiated legal settlement saying if he didn’t uphold his end of the bargain, he would pay $50,000 to Gore.

Less than a month later, a Twitter account ruined the peace.

On April 1, when the first payment to Schmitz was due, Gore refused. Gore says he had just gotten control of the Oscar’s Facebook page, only to discover the entire post history was deleted, and he still couldn’t access the restaurant’s Twitter or Instagram pages. Schmitz hadn’t upheld his half of the deal, Gore decided, so he wouldn’t either. He kept the restraining order in place and halted the first payment of $5,000.

A burglar, identified by police as former Oscar's employee Chris Munje, is filmed by security cameras during a break-in at the restaurant on April 24. Munje has pleaded not guilty.(Photo: Provided by Daniel Gore)

Later that night, a burglar slipped into Oscar’s after hours, swiping $2,000 from a desk drawer, according to an email Gore sent to Palm Springs police. Three weeks later, the restaurant was burglarized again.

This time, security cameras got footage of a man rifling through the restaurant. Gore knew his face.

The burglar appeared to be Chris Munje, who had been hired by Schmitz and fired by Gore a few months prior. Gore suspected they were in cahoots.

“I truly believe the two of these people are working together,” Gore wrote in his email to police.

Munje was arrested after the second burglary and has pleaded not guilty to all charges. Court documents filed in the case draw no link between Munje and Schmitz. In his own court filing, Schmitz called the allegations “false” and said they were designed to “disparage” him.

No liquor, no lease

By the end of April, Oscar’s had a bigger problem than burglaries – no booze.

After Gore refused to make his first payment, Schmitz withdrew his consent to transfer the liquor license to Gore, leaving the restaurant unable to serve alcohol. Without liquor, Oscar’s fell on its toughest times since the infighting began, Gore said, missing out on hundreds of thousands of dollars in revenue over the next three months.

Even the most loyal customers lost interest.

“It’s a great place to go have a couple of cocktails, dance your ass off, and have fun and then kind of be home by 8 to go to bed,” said Brock Saucier, who had attended the tea dance regularly for two years but stopped when the license was revoked. “I definitely missed Oscar’s.”

Gore tried to sustain the tea dance with free burgers and hot dogs, but with no alcohol the party was doomed. He suspended the tea dance and started opening Oscar's only on Fridays for a drag show. Employee work hours were scaled back so drastically that three bartenders were approved for underemployment benefits, according to sworn declarations filed in court.

Each of those bartenders then received texts from Schmitz, who accused them of breaking the law.

Daniel Gore, center, wearing black, celebrates the return of the Oscar's tea dance in September. The tea dance was cancelled after Oscar's lost its liquor license in April.(Photo: David A. Lee, Special to The Desert Sun)

Soon after Schmitz backed out of the liquor license transfer, Gore began pursuing a new license, hoping to get Oscar’s back to normal and the tea dance bustling again.

Gore applied to the Department of Alcoholic Beverage Control, where Schmitz presented yet another roadblock, filing a protest founded on a circular argument. Schmitz said that his name, not Gore’s, was on Oscar’s lease, so the application was erroneous. Schmitz had actually signed an agreement transferring the lease to Gore months earlier, but the transfer was conditional on Gore getting a liquor license. Gore needed a lease for a license and a license for a lease.

Eventually, the actual owner of the Oscar’s building, developer Michael Braun, had to step in. On Aug. 1, Braun issued a letter clarifying that his tenant was Gore, not Schmitz.

One month later, Oscar’s got its new liquor license. Drinks started flowing again. The following Sunday, the tea dance came back.

'Too much hell'

Nowadays, Oscar’s is bustling again under Gore’s control, but the fight over the restaurant continues in court, where dueling lawsuits appear far from resolved.

Schmitz sued Gore alleging breach of contract, fraud and embezzlement in May. Gore responded with a lawsuit of his own, accusing Schmitz of deceit, unfair business practices, slander and libel. Schmitz has also sought to undo the “confession of judgment” he agreed to in March and petitioned for his own restraining order, trying to eject Gore from Oscar’s, which Schmitz claims he is still the rightful owner of. A judge denied the request.

Separately, in September, prosecutors charged Schmitz with willfully disobeying a court order, a misdemeanor crime, because of an incident back in May when he allegedly violated Gore’s restraining order. Schmitz was seen filming Oscar’s with his phone from the frozen yogurt shop across the street. Judge Anthony Villalobos issued a warrant for Schmitz’s arrest on Sept 22. As of Wednesday, it is active.

More than anything else, this warrant – the most severe consequence faced by either Gore or Schmitz – encapsulates how prolonged and bitter the battle over Oscar’s has become.

In separate interviews, both owners said they regretted ever making a deal. Even Gore, who ended up with the restaurant, said in an exhausted voice that he sometimes fantasizes about a peaceful parting where Schmitz is still a proud part of Oscar’s history.

Now, he says, that legacy had been ruined.

“Instead of me saying wonderful things about the person who started it, I don’t even mention his name, if I can,” Gore said.

“Now, as far as anyone is concerned, I started Oscar’s. Because they put me through too much hell.”

Reporter Brett Kelman can be reached by phone at (760) 778-4642, by email at brett.kelman@desertsun.com, or on Twitter @TDSbrettkelman. Reporter Jose Alejandro Bastidas can be reached at Jose.Bastidas@DesertSun.com or on Twitter @jabastidas.